STOCKS PLUNGE
TECH GIANTS DROP AGAIN, SEND MARKET INTO RED FOR YEAR
Stocks dropped again Tuesday as losses mounted for the world’s largest technology companies. Retailers also fell, and energy companies plunged with oil prices as the market sank back into the red for the year.
Oil prices tumbled another 6.6 percent as Wall Street reacted to rising oil supplies and concerns that global economic growth will slow down, a worry that’s intensified because of the trade tensions between the U.S. and China. U.S. crude has plunged 30 percent since early October.
Technology companies were hit after the Trump administration proposed new national security regulations that could limit exports of high-tech products in fields such as quantum computing, machine learning and artificial intelligence.
Retailers also skidded. Target’s profit disappointed investors as it spends more money to revamp its stores and its website, while Ross Stores, TJX and Kohl’s also fell on disappointing forecasts.
The Chattanooga-based CBL Properties dropped another 1.1 percent Tuesday to $2.68 per share — down 46 percent so far this year and its lowest share price since 2009, over continuing concerns about the retail shakeout at shopping malls owned by CBL.
Among Chattanooga’s publicly traded stocks, the Dixie Group suffered the biggest loss Tuesday, dropping by 17.35 percent to $1.15 per share — or less than a third of Dixie’s price at the start of 2018.
The S&P 500 index lost 48.84 points, or 1.8 percent, to 2,641.89. The Dow Jones Industrial Average sank 551.80 points, or 2.2 percent, to 24,465.64.
The tech-heavy Nasdaq composite lost 119.65 points, or 1.7 percent, to 6,908.82. The Russell 2000 index of smaller-company stocks shed 27.53 points, or 1.8 percent, to 1,469.01.
The Dow Jones Industrial Average has lost 3.7 percent in the last two days, and the S&P 500 is off 3.4 percent. The Nasdaq, heavily populated with technology stocks, is off 4.7 percent. The S&P 500 index has fallen 9.9 percent from the record high it set exactly two months ago.
Investors are measuring a number of headwinds and increasingly playing it safe. The global economy is showing signs of weakening, with the United States, China and Europe all facing the rising threat of a slowdown, which can hurt demand for commodities such as oil and pose a threat to company profits. Trade tensions between the U.S. and China appear to be getting worse instead of improving, contributing to the selloff in tech stocks and multinational industrial companies.
“A resolution doesn’t seem to be coming in the short term. A lot of the companies that are front and center [like] Alphabet, Apple, IBM … could be significantly limited in the way they export their technology.”
– KATIE NIXON, THE CHIEF INVESTMENT OFFICER FOR NORTHERN TRUST WEALTH MANAGEMENT
For much of this year, investors were hopeful U.S. and China would easily resolve their differences on trade. That hope has faded in the last two months. Later this month U.S. President Donald Trump and China President Xi Jinping are expected to meet at a gathering of the Group of 20 major economies, and for investors, the newly proposed limits on tech exports were one more hint the leaders probably won’t reach a deal.
“A resolution doesn’t seem to be coming in the short term,” said Katie Nixon, the chief investment officer for Northern Trust Wealth Management. “A lot of the companies that are front and center [like] Alphabet, Apple, IBM … could be significantly limited in the way they export their technology.”